TORONTO (miningweekly.com) – Vancouver-based First Majestic Silver has signed a definitive agreement to acquire Normabec Mining Resources in exchange for shares, the companies reported on Monday.

First Majestic has three operating silver mines in Mexico, and Normabec's main asset is the Real de Catorce silver project, in Mexico's San Luis Potosi state.

“We are continually looking for ways to expand our business including potential acquisitions,” said First Majestic CEO Keith Neumeyer.

“Based on our due diligence we believe the Real de Catorce silver project is an excellent strategic fit and has the potential to become another important asset for our company.”

Normabec shareholders will receive 0,060425 First Majestic shares for each Normabec common share they hold.

They will also get shares in a newly-formed public company – dubbed Newco for now – which will hold Normabec's 100% interest in the Pitt gold property, in Quebec, as well as some other exploration assets in Quebec.

Newco will be managed by the existing Normabec management, while First Majestic will buy a 10% holding through a C$300 000 private placement in the new firm.

The agreement implies a value for each Normabec share of C$0,1806 (C$0,1406 in First Majestic shares and C$0,04 in Newco shares) and represents a premium of 47,7% to Normabec shareholders based on the average prices of First Majestic's and Normabec's common shares for the 20 trading days ended September 11.

The Real de Catorce project comprises about 6 326 ha of mineral rights, which contains a drilled NI 43-101 compliant resource of 33,69-million measured and indicated silver ounces, plus 13,10-million inferred silver ounces.

The acquisition has the unanimous support of both boards of directors and requires the approval of at least 66,66% of the votes of Normabex shareholders represented at a special meeting, as well as court and other regulatory approvals.

First Majestic shares slid 3,4% on Monday, to C$2,59 apiece by 15:58 in Toronto.

Normabec leapt 27%, to 16,5 Canadian cents.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.